Marketers rightly believe that they should work to foster the growth of strong and enduring relationships between brands and consumers. However, a recent analysis reminded us that there are occasions when simply growing awareness of a brand can drive significant new business. When awareness of brands in a category is low, being better-known can be more important—at least in the short-term—than being better-liked.

For those of you who live outside the U.S., let me introduce you to a recent star of TV, radio, outdoor and online advertising.

A gecko may seem an unlikely brand icon for a car insurance company, but over the last few years Geico has steadily increased its spending on ads featuring this playful reptile. As well as driving significant growth in quotes, Geico’s advertising has set off an ad war involving other insurance companies such as State Farm, Allstate and Progressive.

Responding to puzzlement among investors in the insurance category, the investment firm Morgan Stanley asked Millward Brown for a point of view on Geico’s strategy. The gecko may be cute, but is it likely to pay off in the long run?

Our analysis used WPP’s BRANDZ to examine the relative strength of brands in the U.S. insurance market from 2001 to 2006. Overall the conclusion was clear. Geico’s advertising helped the company grow awareness of the brand among insurance buyers (from 57 to 73 percent). But we did not see commensurate growth in the number of people who demonstrated a strong bond to the brand. So why had quotes responded so strongly in response to the advertising?

The answer lies in the dynamics of the U.S. car insurance market. Most insurance buyers know of only a couple of companies that offer car insurance, and fewer than one in three have any real attachment to any one company. On the surface, this might seem to suggest that brands are unimportant in this category, but that is not the case. Although car insurance is a low-interest category, and is purchased infrequently, people seem to believe that the potential risk involved is quite high. They are more likely to say it is important to choose the right brand in this category than they are for most other infrequent purchase categories.

So in a category where most of the options are little-known and indistinguishable from one another, Geico’s gecko has created a brand presence that helps Geico stand out from the crowd. The playful style and the promise of saving time and money are appealing, and the increased familiarity has driven many people to Geico’s web site to get a quote. (Unlike traditional broker-based businesses, contact with Geico is over the web or phone.) The question is, will this strategy continue to be successful?

Geico’s success is the result of becoming better-known relative to other brands in the category, not better-liked. Most companies in the category are now increasing their ad spending, so the advantage of being better-known is likely to become diluted as more companies vie for peoples’ attention. I believe the battle will then shift more to building strong and enduring relationships with potential and (importantly) existing customers.

This change will present companies like State Farm with an opportunity, and Geico with a challenge.

Geico’s relationships with consumers are demonstrably weaker than those of State Farm. Both companies enjoy equal levels of familiarity among insurance buyers, but State Farm has always traded on the strength of its local brokers using the tag line “Like a good neighbor State Farm is there.” An analysis of why people have an attitudinal bond with State Farm shows that the company is strong on brand appeal and service quality, while Geico underachieves on those metrics. So State Farm’s current positioning provides it with a strong platform from which to revitalize the brand to compete with Geico.

Geico, on the other hand, may be running out of room on its existing familiarity runway. Since it is a web- and phone-based business, people may doubt that it will offer the same support as a company with local brokers. The gecko itself may also detract from a more reassuring message – sure he’s playful and outgoing, but is he going to help when things go wrong?

Recognition of these issues would appear to be reflected in Geico’s new advertising. New campaigns have moved away from the gecko but still seek to maintain a distinctive personality by featuring testimonials from real people. To get a flavor for how the old and new campaigns compare to a typical State Farm ad, click on the following links to play the ads.

Geico: Gecko              Geico: Little Richard      State Farm: Foot

One can definitely argue about the relative merits of Geico’s new ad campaign – e.g., is Little Richard advertising himself or mashed potatoes? – but the basic strategy seems clear: Reassure people that the company will stand by them. Of course, the real challenge is not communicating this fact, but making sure that it lives up to its promises. Unless the business is structured to deliver a satisfying experience, advertising like this could undermine Geico’s trust and credibility rather than build it.

Having watched the ads, do you think that there is a difference in generational appeal here? Is the younger generation more likely to trust a web-based company? Or are they simply more accepting of a tongue-in-cheek style? Is broadcast advertising the best way for an insurance company to promote trust and customer care, or would it be better to stimulate Word of Mouth and consumer-generated content? Please let me know your thoughts.

Tags: Nigel Hollis, Geico, gecko, insurance, advertising

This entry was posted on Friday, February 16th, 2007 at 11:46 am and is filed under Brands, Creative, Research. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. Print this Page